Chapter I Crm


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Chapter I Crm

  1. 1. <ul><li>DEFINITIONS OF CRM </li></ul><ul><li>Every time a customer approaches your business they arrive </li></ul><ul><li>with an expectation, </li></ul><ul><li>It may be a service need or a new product interest but in every </li></ul><ul><li>case they have an expectation that accompanies their interest in </li></ul><ul><li>your business, </li></ul><ul><li>What happens next will from an experience that shapes their </li></ul><ul><li>behavior a good experience may increase their loyalty and </li></ul><ul><li>tendency to purchase again a poor experience may transfer </li></ul><ul><li>their business to your competitor </li></ul><ul><li>The availability to recognize this process and to actively manage </li></ul><ul><li>it forms the basis for customer relationship management. </li></ul><ul><li>Craig Conway, President and CEO, Peoplesoft Inc : Customer </li></ul><ul><li>Relationship Management at the Speed of Light by Paul </li></ul><ul><li>Greenberg, edition 2001, Tata Mc-Graw publisher, page5-6. </li></ul>
  2. 2. <ul><li>Customer Relationship Management is a process of Acquiring, retaining, and growing profitable customers, Lawrence Hayden, putting CRM to work, the rise of relationship, CRM a strategic Imperative in world of E-business John Wiley and sons,2000, Page 10-11. </li></ul><ul><li>The Infrastructure that enables the delineation of and increase in customer value and the correct means by which to motivate valuable customers to remain loyal-indeed to buy again. Jill Dyche, the CRM hand book: business guide to customer relationship management, Pearson education, asia,2002,page 4. </li></ul>
  3. 3. <ul><li>An enterprise approach to understanding and influencing customer behavior through meaningful communications in order to improve customer Acquisition, customer retention, customer loyalty and customer profitability. Roger S Swift, Accelerating Customer Relationships, Prentice Hall PTR, 2001 page 7. </li></ul><ul><li>The role of Customer Relationship Management is to identify, establish, maintain and enhance relationships with customers and other stakeholders, at a profit, so that the objectives of all other parties involved are met, and that this is done by a mutual exchange and fulfillment of promises. Gronroos, Marketing redefined, Management Decision, Vol. 28, No 8, 1990, pp 7. </li></ul>
  4. 4. <ul><li>EVOLUTION OF CRM </li></ul><ul><li>Stage I : Mass marketing : </li></ul><ul><li>According to (Borden, NH,1965) The age of Mass marketing replaced the intimacy of a direct sales force in many organizations. </li></ul><ul><li>Centralized large scale production, wide geographic distribution and one way communication on a grand scale created a tremendous variety of easily available affordable goods </li></ul><ul><li>this gave away inefficient corner store and door to door models and in place supermarkets, malls and mega stores are established </li></ul><ul><li>Customers have benefited from this cost efficiencies but something was lost in this bargain, that loss was the sense of connection customers has with the local storekeeper personalized service </li></ul>
  5. 5. <ul><li>Stage II : Direct marketing: </li></ul><ul><li>Direct marketing followed the mass marketing strategies but closely monitored the responses. Direct marketers created different versions of the communications and promotion material, catering for different parts of the country. </li></ul><ul><li>normally the response to direct marketing was very less. </li></ul><ul><li>However direct marketing proved to effective in marketing certain products and also served as an important purpose. </li></ul><ul><li>It established that the consumers had preferences and that marketing campaigns and messages could be tailored to meet customer preferences. This lead to Target Marketing. </li></ul>
  6. 6. <ul><li>Stage III : Target marketing: </li></ul><ul><li>According to (Phillip Kotler, 1984) with the advancement of technology and refinement in direct mail and telemarketing, the use of information systems technology allowed the selection of specific ( targeted ) customers via mail or telephone </li></ul><ul><li>target marketing had advantage of potentially receiving a direct response from a customer </li></ul><ul><li>target marketing recognized the need to interact more with customers but at very superficial level </li></ul><ul><li>lack of specific data as it relates to responses from the targeting means resorting to averages for response rates customer purchases and other data. </li></ul>
  7. 7. <ul><li>Stage IV ; CRM (Customer Relationship Management) : According to (Peppers. D and Rogers. M, 1993) CRM is </li></ul><ul><li>The first variable is information and analysis ( knowledge) one has to know what the customer wants, needs, and values. CRM is to Segment the Customer by developing a number of homogeneous subgroups form the heterogeneous markets. </li></ul><ul><li>The second variable is the need for interactivity and personal contact and the way in which the customer wants to be contacted. </li></ul>
  8. 8. Customer Centric Organisation
  9. 9. <ul><li>Customer Life cycle Management : </li></ul>Customer Need Assessment and Acquisition Customer Retention and referrals for new customers Customer Development through personalization and customization Customer Equity Leverage through cross selling and Up selling CRM Migrate Migrate Migrate Migrate
  10. 10. <ul><li>Customer Life time value : </li></ul><ul><li>Past year’s average sales </li></ul><ul><li>+ </li></ul><ul><li>expected (forecasted) average sales during remaining life </li></ul><ul><li>+ </li></ul><ul><li>Referrals </li></ul><ul><li>+ </li></ul><ul><li>Cross selling </li></ul><ul><li>- </li></ul><ul><li>Average past year’s cost (service) consumption </li></ul><ul><li>- </li></ul><ul><li>expected (forecasted) average cost (service)consumption during remaining life </li></ul><ul><li>- </li></ul><ul><li>Customer back-outs for Bad WOM </li></ul>
  11. 11. Customer Product Perceptions Purchase Experiences Learning Process Cognitive Process Pricing Cost Competition Organisation Objective Customer – Product Profitability
  12. 12. Customer – Base Portfolio Analysis Customer segment 1 Customer segment 2 Customer segment 3 Customer segment 4 Product 1 Product 2 Product 3 Product 4